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Market perspectives - March 2018


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Market perspectives - March 2018

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Market perspectives - March 2018

  1. 1. Market Perspective – March 2018 Experience Insight Impact Overview: With fourth quarter (Q4 2017) earnings season largely complete, it appears the S&P 500’s sales and earnings growth trends are continuing upward. Global corporate growth expectations are improving as well. This month, we revisit corporate earnings and peer into future expectations. 1
  2. 2. Corporate Earnings Rebound Continues Experience Insight Impact • Year-over-year, Q4 S&P 500 sales grew 7.67%, while earnings grew 14.28%. • This is the highest revenue growth since Q3 2011. All 11 sectors reported year- over-year growth in sales. Source: Bloomberg 2
  3. 3. Earnings Were Generally Better Than Expected Experience Insight Impact To date, 99% of the companies in the S&P 500 have reported earnings for Q4 2017. Of these companies, 73% reported actual Earnings Per Share (EPS) above the mean EPS estimate, which was above the five-year average of 69%. In aggregate, earnings exceeded expectations by 4.4%, which was slightly above the five-year average of 4.3%. Due to these upside surprises, the S&P earnings growth rate has improved to 14.3% from 11.0% on December 31st. Source: FactSet 3
  4. 4. Earnings Growth Expected to Continue Experience Insight Impact Notwithstanding likely future revisions, earnings growth is expected to continue. Policy tailwinds (e.g. tax reform) are adding to the growth. 4 Source: FactSet
  5. 5. Global EPS Revisions Spiking Experience Insight Impact On the back of better Q4 earnings, global companies (as measured by the MSCI All- Country All World Index) are revising their 2018 earnings guidance higher. 5 Source: Bloomberg
  6. 6. International EPS Revisions Better Than Global Average Experience Insight Impact Europe’s earnings revisions (i.e. when companies increase their EPS guidance) has been trending better than the global average. Source: Bloomberg 6
  7. 7. Market Perspective – March 2018 Experience Insight Impact Conclusion: With strong earnings trends as a backdrop, global markets continue to advance even with the return of more normalized market volatility. While we are continuously monitoring economic trends, it appears 2017 was a strong year for earnings growth and early 2018 is showing a continuation of this trend. 7
  8. 8. Disclaimer Experience Insight Impact Opinions expressed in this commentary may change as conditions warrant and is for informational purposes only. Information contained herein is not intended to be personal investment advice for any specific person for any particular purpose. We utilize information sources that we believe to be reliable but cannot guarantee the accuracy of those sources. Past performance is no guarantee of future performance; investing involves risk and may result in loss of capital. Consider seeking advice from a professional before implementing any investing strategy. 8